State says it will not intervene with Winsted schools money problems

WINSTED >> Despite statements by town officials to the contrary, the state won’t be swooping in anytime soon to save Winchester’s ailing school district and keep schools from shutting down in December.

The mayor and Board of Selectmen maintain their position that the state will come in and intervene in the event the town cannot pull together funds to keep the schools in operation in December, when a cash shortage would mean the district could not make payroll or pay bills. But the state Office of Policy and Management disagrees and said the town needs to figure this out on its own.

During Monday night’s Board of Selectmen meeting, Selectman Kenneth Fracasso said in the event the loan is not secured, he is sure the state will come to the town’s aid.

“The state or the fed aren’t going to let the kids in this community go uneducated,” Fracasso said. “They’re going to step in. [The students] may have an extra week off at Christmas break while they put a committee together and come marching down Main Street.”

Superintendent Thomas Danehy informed the State Department of Education that the Winchester Public Schools are in danger of closing in December if it doesn’t receive funding from the town. With this warning, the state initiated an investigation in to the town’s funding of the state mandated Minimum Budget Requirement, of around $20 million. Town Manager Dale Martin and Finance Director Robin Manuele are working to secure a loan from Bank of America to pay the district. The loan would be repaid when the town receives state Education Cost Sharing funds in April, at a cost of about $35,000 in debt service. If the around $2 million loan is approved, the town is set to vote on whether to accept it at a Nov. 16 referendum.

Fracasso said he doesn’t think anyone in the town believes the schools will close if the loan falls through, but Gian-Carl Casa, Under Secretary of the Office of Policy and Management (OPM) said the state is far from taking action.

“We have no intention of intervening,” he said. “I’ve not been in any meeting in which anyone has suggested intervening.”

Casa said at this point he doesn’t think the town has exhausted all of its possible options. Though the town is currently exploring the possibility of receiving a tax or grant anticipation note and a supplemental tax, Casa said the town may still have some unexplored avenues of revenue.

Though the state has intervened for other towns with failing finances in the past, Casa said the Winchester situation does not meet the level of severity other towns have faced.

“There have been times in the past where municipalities have come to the state and asked for assistance,” he said. “The state guaranteed bonds in return for having oversight of the affairs for the town. That’s a drastic and dramatic action and we don’t think it’s necessary in this case.”

Casa said when the state provided aid for the city of Bridgeport during is financial downturn in 1988, the state temporarily took over the town’s finances.

According to Casa, Winchester’s financial debacle is not comparable to what Bridgeport faced then. Casa said the state can’t even be sure of the “magnitude” of the problem is because the town’s audits aren’t up-to-date.

“We’re sympathetic that the town is in a bad situation and much of it is because of the illegal action,” Casa said about the former finance director, Henry Centrella who is currently facing five counts of first-degree larceny. “But at this point we think they still have options by which they can solve their own problems.”

Over the years, the state has had direct oversight of Bridgeport, West Haven, Waterbury, and Jewett City, which is part of Griswold. According to Casa, Bridgeport was first of these municipalities to receive state aid. The most recent was Waterbury.

Casa said the towns that received aid never received funds from the state. The aid came in the form of financial advisement.

“We did not provide cash,” he said. “I think that in every instance the municipality issued bonds and we backed them with the full faith and credit of the State.”

Casa said the state maintains its position about the town and is looking “forward to hearing from [Winchester] about the progress it has made.”

Martin continues to work with Bank of America and a number of other unnamed banks in hopes of securing a loan to aid the schools.

Though he and Manuele, remain in daily contact with the banks, neither has received word on the loans’ status.

Martin himself said there is currently no plan B if the loan is not secured. Manuele however has begun to hold off on paying several bills that are 30-90 days passed to in case those funds are needed for the schools.

“I’m not going out and paying the full amount that I planned in my cash flows statement,” she said. “I’m just being cautious in case the bank loan doesn’t come through and we need the money for schools.”

Though Fracasso said he believes the state will be the town’s saving grace, he also said a backup plan may be prudent.

“There is no contingency. Just as there’s no contingency plan if the vote on the [Grant Anticipation Note] fails,” he said Monday night. “And I don’t think there is anyone in this room that really thinks the schools are going to close. If this should fail, we only have a month until December when we’re going to be out of money.”

In an effort to immediately solve the issue, Fracasso, a Republican, moved to levy as $3 million supplemental tax Monday night, but that was voted down by the Democrats on the board.

The Board of Education’s business manager, Nadine Savage, maintains that the schools will need to close due to an inability to pay its teachers in December.

No movement or decision has been made to remedy to schools problem but Martin and Manuele said the banks should return with a decision soon.

Reach Mercy Quaye at 860-489-3121 ext. 321.

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About the Author

Reporter Mercy Quaye covers statewide breaking news for The New Haven Register, The Middletown Press, and The Register Citizen. Reach the author at mquaye@registercitizen.com
or follow Mercy A. on Twitter: @Mrs_WriteNow.